Sunday, February 27, 2011

Using QuickBooks Online and Form 1099

QuickBooks 1099 Time

It's QuickBooks 1099  time  and you need to prepare your business’s Form 1099s which  is due February 28.   Hopefully you haven't waited for the last moment to use  QuickBooks 1099 module, which is typically the case for most small businesses. Although this blog post is designed for users of QuickBooks Online, the QuickBooks 1099  tips may be used for other versions of QuickBooks and other small business accounting software. This article will not discuss what payment qualifies as a 1099 recipient or how to print the form 1099. It discusses a way to check the information and provides some planning tips for next year.

It's important to make sure that the information appearing in each form 1099 is accurate and represents the cash transactions that occurred for the year that has just ended. The furthest thing from your mind  is to have a vendor or stockholder or any person who received the form 1099 to  call you up to complain that the QuickBooks 1099  they just received is incorrect. Not only is that embarrassing, it’s a  waste of time because now you have to amend the QuickBooks 1099  and probably pay fees to have the QuickBooks 1099   amended.

Verify the information  being used  to file the QuickBooks 1099 with the IRS

It’s important to make sure the QuickBooks 1099  information is correct before you send it out. You can perform this check by  reviewing the information that is in the form 1099. Fortunately, QuickBooks 1099  makes this easy, by allowing you  to drill down for each  1099 recipient and you will see the detail payments  for each 1099 recipient before its transmitted to the payee.  It's important that the information appearing in the form 1099 is an actual cash payment made during the preceding year. The information in the Form 1099 should not include  accounts payable or anything else. You can verify the QuickBooks 1099  information  in two ways. The first is look at the QuickBooks 1099  detail transactions comprising the 1099 summary amount directly from a 1099 report,  and the second, is to look at the accounts payable detail as of December 31 to make sure that the payables are not included in the amounts being reported in the form 1099. From within QuickBooks Online you do this by drilling down on the amount shown in the summary QuickBooks 1099  form.

You can watch  a very short video explaining the drill down procedure or skip the video and look at these screenshots. Here is the video

QuickBooks 1099 Planning Tip
The most important tip, is to  plan to gather all of the payee information such as correct name, address and Taxpayer ID number in advance of preparing the form 1099s and more importantly to carefully read the IRS Instructions for Form 1099 –MISC and make sure that you are reporting the correct types of  payees . The way you can do this, is to set up a policy and procedure for the book keeper to prepare a  simple one-page new vendor setup form, that has the vendor’s name, address, email,website,tax payer ID number,account to be coded and budgeted amount for the year.The new vendor set up form should be approved by the owner . This form ensures that your bookkeeper is obtaining the vendor and the  QuickBooks 1099  information timely and more importantly that only vendors known to the owner are being properly set up and paid.

If you are like most users, it’s hard to believe that you cannot prepare the Form 1096 from QuickBooks Online. We are waiting for Intuit to make that change to their QuickBooks 1099  drop down.

Wednesday, February 16, 2011

History feature in the Journal Entry Screen for QuickBooks Online

Intuit is beta testing a history feature in the journal entry screen for QuickBooks Online. This is useful because it lets you track the changes you or your bookkeeper has made to a journal entry. In other words, the record is preserved, which provides a trail of the changes that were made to the journal entry. This is helpful and time saver because you no longer have to review activity log, if you need to find out the history of changes made to your accounts. I suspect that only accountants are using this feature, but in the event you want to monitor the number of times that your book keeper has changed a journal entry you can now do it without leaving the journal entry screen.This is important because the more changes that people make to the same journal entry is an indicator of problems they are having and is an indicator of inefficiency.

As a primer, an adjusting journal entry is created to adjust account balances. Adjusting entries are used for a variety of reasons, including booking depreciation or amortization, reallocating accruals and reversing accruals of prepaid income or expenses, adjusting interest, penalties, or discounts, and entering bank or credit card fees or interest.